Module 2– ILO Conventions and approach on unemployment protection Celine Peyron Bista ILO, 2013

Content of the presentation ILO’s standards on unemployment protection What are the main points of discussion when introducing UI? How to set parameters?

Protection against Unemployment in ILO Standards (up-to-date) R.176: Employment Promotion and Protection against Unemployment Recommendation, 1988 C.168: Convention concerning Employment Promotion and Protection against Unemployment, 1988 C.102: Convention concerning Minimum Standards of Social Security, 1952 (Part IV – Unemployment Benefit) R.202: Recommendation concerning national floors of social protection, R.202

Major Ideas around which the Convention No. 168 was built (1988)  Under discussion since 1972  Economic growth : best cure against unemployment with a flexible response to change; lead to creation and promotion of all forms of productive and freely chosen employment including small undertakings, cooperatives, self- employment and local initiatives for employment;  Social security = a means to promote employment and increase capability & employability (concept recalled by the SPF Recommendation)  Need for active coordination, integration and consolidation of the different means (employment assistance and economic support) serving the goal of employment promotion  By establishing a “system of protection against unemployment”.

Objective: To protect workers and their family against loss of employment and earnings Enhanced employability: To facilitate return to employment as soon as possible (including re- training) Income security: To protect the unemployed and their families against poverty DOUBLE OBJECTIVE MEASURES UI Benefits + ALMPs

6 The ILO’s Perspective The Provision of Unemployment Benefits on the basis of – Social Insurance or non-contributory schemes, – Periodical payments, and – Conditioned to active search of work. is optimal in most cases, for reasons including: – It is better-suited to ensuring the rights of workers: allows for income support even with insolvent employers (vs. severance payment); – The social insurance mechanism allows for “pooling” risks and costs (small/big enterprises, declining/raising sectors, rich/poor regions, etc…) (vs. individual saving accounts)

Equality of treatment (non-nationals, domestic workers, type of contracts) Tripartite board of administration Right to appeal (make it a reality!) Periodical valuation, in any case before any amendments to the system Inspection and enforcement provisions (legal proceedings and penalties in case of no- payment of contributions) Common principles to all social security systems     

8 UI, EI, is there any difference? National schemes may have the title: – “Employment Benefit Scheme” (Korea, Japan, Canada… ) or – “Unemployment Benefit Scheme” (France, Thailand, Germany…) In most cases, the title may not affect the scheme substantively, BUT It can be useful for the title to convey the national policy approach to the subject

On-going discussions in the region Severance payment vs. unemployment protection benefits Individual accounts vs. social insurance system to cope with unemployment risks

Severance payment vs. UI (ILO principles) Why severance payment does not comply with ILO social security standards? “Severance payment, commonly in force in the region”  Benefits should be periodical and temporary (different from a lump-sum) Collective financing of benefits and risks pooling State’s responsibility and ultimate guarantor of the funds   Linkages with employment promotion (ALMPs) 

Individual saving accounts vs. UI (ILO principles) Why saving accounts does not comply with ILO social security standards? “Savings accounts have been promoted by certain development partners”  Equality of treatment (between age, sex, migrant workers) Collective financing of benefits and risk pooling (among type of contracts, sectors of the economy, etc…)  Predictability of benefits (level of benefits should be determined based on past earnings – replacement rate) 

Guiding parameters of C.102 and C.168 C102C168 Coverage< 50% of all employees< 85% of all employees (public/private) & apprentices Provisions for seasonal workers and new entrants BenefitsPeriodical and temporary At least 45%At least 50% 13 weeks/12 months26 weeks/unemployment period or 39 weeks/24 months Medical care Rate settingEmployees’ contributions should not exceed 50% of the financial resources allocated Determined by actuarial studies and calculations

Guiding parameters of C.102 and C.168 C102C168 Qualifying conditions Qualifying period, as to prevent abuse Excluded: - Laid-off for miss-conduct - Voluntary termination without just cause failure to use facilities for vocational training, employment as grounds for refusal of the benefit Severance payN/Awhere severance pay also granted, allows for corresponding reduction of the unemployment benefit

Group exercise: Comparison between existing unemployment protection laws and ILO standards